Peer-to-Peer Car Sharing...Money In The Bank Or An Accident Waiting To Happen?

I just learned of something new! A friend of mine who has been needing some extra income has joined the ranks of the sharing economy. No, she is not renting out her house on Airbnb. She is not driving for Uber. She has joined a peer-to-peer car rental company.

I wasn't sure what that was, so of course I did a little research. And what I discovered has me concerned that even though she seems to be making some pretty decent money, the risk don't outweigh the benefits.

What exactly is peer-to-peer car sharing? It's pretty simple. When she isn't using her card, she rents it out to strangers. There are several sites you can use for this. She has listed her car on Turo. But I found a few other sites as well such as Getaround and HyreCar, She lists her car on the site, much like you might list your house on Airbnb with pictures and all the details. She gets to set her own price. Once someone rents her car, she simply meets them, gives them her keys, and then picks up her car at the end of the rental period. Sounds like an easy way to make a few bucks, right?

Right now my friend says she is making around $500 a month renting out her car. I have not asked for proof of that claim. But Getaround says that owners can make as much as $10,000 a year by renting out their cars. Not bad for little to no work!

The companies say that they screen every renter and they can't sign up if they've had a major accident. And they do have insurance to cover their car owners. And this may be fine for someone who is renting out their Kia (nothing against Kia. Just a comment on their affordability). But I'd be a little hesitant to rent out my top-of-the line brand new Jeep Gladiator. If someone totaled my vehicle, I'm not sure some third-party insurance company would pay me it's true value. Unless my own insurance policy covers the driver in this case...which it doesn't. I asked. I could be stuck with some very expensive problems. 

So far, my friend has been lucky. No damage to her car. She says she talked to other renters who told her to make sure she got to know the people renting her car before she gave it to them. I'm not sure how that would be possible. But she is a pretty good judge of character, so maybe. And she says she always inspects the car with the renters before and after each trip, noting any damage. Much like a regular car rental company does. Plus she always asks the renters where they are going...just in case. 

So what do you think? Would you rent your car to a total stranger? It seems to be working well for my friend. But as much as I like easy ways to earn some extra income, I think I'll sit this one out.

Do you have any experience with peer-to-peer car sharing? Let us know in the comments. 

Cashing In On Cash Back Credit Cards

I know, I know...

I told you credit card debt was bad. And it is. You don't want it if you can help it. And if you have it, you want to get rid of it as quickly as possible.

But...

What if you could use your credit card to make a little extra money each month and not rack up credit card debt? How cool would that be?

It is possible. But it takes the right kind of card, the right kind of purchases, and the will-power to not go deeper into debt.

First the card.

You'll need a credit card that pays you cash back on purchases. These are credit cards that pay you back cash - real dollars and cents - for making purchases with their card. Typically, you will earn between 1% to 6% of each transaction, depending on the card you use. Some cards pay a flat rate on every purchase. Others pay more for certain types of transactions (gas for example) and less for everything else.

Next the purchases.

You will need to know what types of transactions earn cash back. While many do give cash back on everything, others are more selective. The most common are groceries and gas. But I have seen cards give cash back on everything from transit costs to streaming. Others will give a low flat rate on any purchase and bonus rewards on other purchases such as restaurants. There are even cards that change the categories for cash back purchases periodically. So in January you might get cash rewards on gas and groceries and in April it's travel and dinner.

Now comes the will-power part.

Once you have your cash back credit card and you know which purchases qualify for cash rewards, you use the card to make those purchases. If it pays cash back on everything, you use it for everything. If it's groceries, you use it everything time you go to the grocery store. Then, and this is where the will-power comes in and it's important, you pay the entire credit card balance. Every month. Without fail. It doesn't do any good to earn 1% cash back if you're paying 18% interest on your balance. You absolutely MUST pay off the entire balance each and every month.

If you pay off the balance every month, you can collect the cash rewards without paying any interest on your purchases. And that adds up to money in the bank. Use that extra cash to add to your emergency savings. Or place it in your regular savings if you already have your rainy-day stash fully funded.

Passive Real Estate Investing...Is That A Thing?

If you're like me, you've had a rental property before...and quickly sold it, swearing "never again!"  

But what if you could invest in commercial and residential real estate without having to any of the actual work involved in managing your property? Sounds too good to be true, doesn't it?

Surprise! This is actually a viable way to earn some extra income. In fact, it can be one of the most powerful ways to put your money to work.

There are a TON of companies that give you the ability to invest in commercial and residential real estate projects without having actually to do any of the heavy lifting yourself. It's called passive real estate investing, and it's a real thing. And at the end of this post, I will give you the two companies I found that appear to be among the best. 

But first, what is passive real estate investing?

Put simply, passive real estate investing is investing in real estate without any real hands-on effort from you. No rent collecting. No property management. No maintenance. Nothing. You don't have to deal with tenants or 2:00 AM phone calls about noisy neighbors or leaky faucets. No active participation whatsoever.. And no, I'm not talking about buying the property and then hiring a property management firm to manage it for you.

I am talking about investing in a Real Estate Investment Trust (REIT). 

REITs are companies that invest in income-producing real estate. They give you the ability to invest in real estate without having to purchase and maintain the actual property. And you don't have to deal with tying to get financing through a bank. We all know how time-consuming and stressful that can be! Through an REIT, you can often get started investing in real estate for as little as $500. 

Real estate values tend to appreciate over time. Rents also tend to rise over time. And real estate tends to be less volatile than stocks or bonds. Then there are the tax benefits related to real estate investing. Investing in an REIT can be a good strategy to generate passive income. 

Of course, real estate investing does come with risks, as does any form of investing. If the value of your property portfolio goes down or the housing market in general declines, you can lose your investment. So always do your due diligence and research before making any investment. No investment can guarantee you either a return or even protection of all your principal. And if they say they can, you might want to walk away. But overall, real estate has proven to be a highly stable, lucrative investment. And an REIT allows many people who couldn't otherwise afford to purchase income-producing properties an opportunity to invest in real estate. 

I am not an expert on REITs or passive real estate investing. Before you decide to invest, I would find someone with real knowledge of real estate. I have done some research though and have found two REITs that have decent reviews. I am not an affiliate for either of these companies. Both have their pros and cons. 

Fundrise: Founded in 2012 and headquartered in Washington, DC, Fundrise is one of the leading real estate investment platforms.

DiversyFund: With a $500 minimum investment and no management fees, DiversyFund is a low-cost entree into the often high-roller world of real estate investing. 

If you have often dreamed of being a real estate mogul, or if you're just looking for a way to add some passive income to your financial strategy, investing in an REIT might just be for you. 

A Financial Accountability Partner? You Got To Get One of These!

 

My husband does it for me. And I do it for him. We it do for each other regularly...

We each are the other one's financial accountability partner. That means we check in with each other regularly about our spending, saving, and budgeting. Knowing he has to talk to me about the set of new pipes he wants for his bike or that I have to confess that I spent a bit more than expected on new flowers for the garden really helps us keep on track with our financial goals.

I can already hear some of you rearing up in indignation. Why should I have to be accountable to my spouse about my spending. I make my OWN money! It doesn't have to be your spouse. A financial accountability partner can be anyone who agrees to help encourage and support you and ensure that you are keeping on track with your financial goals. But here's the reasons why it works well for us as a couple.

An accountability partner of any sort is usually a two-way relationship. Like your workout buddy at the gym. You're both helping each other meet your goals. And when you're both accountable to each other it can actually help strengthen your relationship. Plus our individual financial goals directly impact our family financial goals. So it just makes sense that we work together to keep each other on track.

I realize that not everyone has the kind of relationship my husband and I have. If you are looking elsewhere for a financial accountability partner, there are some traits you should look for.

1. You will be discussing your financial goals and perhaps even your current financial status. So you will want to be sure your partner can be trusted with this information. 

WARNING!!! Your partner does not need to know your bank account number, SSN, or have access to your credit card or bank statements. I don't care how much you trust this person. If they ask for this information, look elsewhere.

2. Your partner must be able to be totally frank and honest with you. If they are afraid to call you out for slacking on your goals because they fear it might damage your friendship or make you angry, they are not a good partner. (On the flip side, you need to remember that your partner is truly trying to help you reach an important goal...and at your request. It does a great disservice to both of you if you get defensive or angry when they hold you accountable.)

3. Your partner has to be available. That means they need to have the time and the desire to help you. If they don't understand the importance of your efforts, or they don't have the time to talk to you regularly, they are not a good fit. 

4. If it's a family member, you need to be sure they are able to give you honest feedback. If your (adult) child or sibling is acting as your financial accountability partner, it is imperative they have nothing to gain or lose by you meeting your goals. 

Once you have selected your partner, it's important to establish some guidelines. You can write a formal agreement which you both sign. Or you can simply discuss the details of your new relationship. Whatever works for you! Just be sure you include details like how often will you discuss your goals. Will you meet in person or will it be via phone or Zoom? You might even want to create an agenda for these meetings. Again, whatever feels comfortable for you and your partner.

Do make sure your partner is fully aware of what you are trying to accomplish. Which means you need to be sure of your goals. I'm sure you've heard of SMART goals. If not, Google it. You'll find all the help you need to create Specific, Measurable, Attainable, Realistic, Time-Based financial goals for yourself.

Live Below Your Means

Do you truly want to be able to set aside a sizeable emergency fund? Send your kids to college? Not have to worry about money? Here's the secret...

Live below your means.

By now, you have your budget finished. You know exactly how much to you need to save to reach your goals. But the true ticket to financial freedom is to spend less than you bring in each month.

Once you learn to do that, you can kiss debt goodbye. If you have already gotten into debt, you can start paying it off. You can start putting money aside for emergencies. You can start saving for your future.

This may be a struggle in the beginning, especially if you and your family have been used to freely spending. But it will be worth it in the end when you can truly say you are financially free.

How do you get there? Here are some simple steps:

1. Get out that budget you created and take a good look at where you spend your money. You are looking for things that you can eliminate. I used to stop a Starbucks almost every day for coffee. At almost $6 a cup every day, that was $180 dollars a month...for coffee. $2160 a year....just on coffee! Just by stopping this one habit, I saved over $2000. 

My husband and I ate out several nights a week. When you consider even fast food meals can now run $10 or more, that was another expense that added up substantially. 

300 channels of cable TV that we never watched. 

These are some examples of expenses that we were able to stop and in the process save several thousand dollars each year. 

What unnecessary expenses can you eliminate from your budget? Get out that budget axe and chop out everything you can reasonably eliminate!

2. Once you've cut every possible unnecessary expense you can, it's time to look for ways to spend less on what's left. We switched phone carriers to get a better cell phone plan. The minor changes in coverage were offset by the $200 monthly savings. 

We used to buy a lot of prepackaged foods like salads and precut veggies. Buying them whole and cutting them myself saved us money and the vegetables were fresher. Same with meat. Instead of purchasing already diced chicken or shredded pork, I bought chicken breast or pork roast and cut it myself. These may seem like little things, but every little cut adds up. Add that to what you saved in step 1 and you can put aside a few thousand dollars every year.

3. Increase your income. Once you've cut as much of your spending as possible, look for ways to increase your income. If 2020 taught us anything, it's the need for multiple streams of income. If you are one of the millions who lost your job during this pandemic, imagine how much less stressed you would be if you still had some money coming in from other sources. No matter what your business or job is, there are ways to bring in additional income that do not interfere with what you are currently doing. If you are looking for ways to add some additional income streams to your business and need some guidance, email me at melodieanw@smartaboutstuff.com. 

Learning to live below your means can be challenging. Or it can be fun! I love looking for ways to eliminate more spending from my budget. It's like a game and every time I win, I make money! It's a matter of attitude. If you look at it as sacrifice and deprivation, it will be hard. But if you look at as a path to financial independence, you'll be amazed at how enticing your future will look.

Make a Budget!

Do you REALLY want to control your spending? Do you REALLY want to have money to put towards building your emergency fund or purchasing supplies? Yes? Then you need a budget!

Now before you cringe and get all worked up over numbers and percentages and what not, just take it easy. It doesn't have to be complicated. You don't need to account for every penny you spend. The goal is to help you live within your means and make sure you are on track to reach your goals. Whatever budgeting system you use to do that is okay!

A budget is simply a tool that shows how much money you expect to earn and how much you expect to spend. It doesn't have to be overly restrictive. Think of it as a way to plan how much you can spend and how much you can save each month. 

Sounds easy, right? So why does the word "budget" strike fear into the hearts of many? And why do so many fail to have one? Or if they do have one, fail to follow it? Simple truth...most aren't willing to do what it takes. A budget only works if your are totally honest about your financial situation. And most of us are truthful about our income, But when it comes to expenses, not so much. It can be hard to admit you spent $100 on runs to your favorite coffee shop last month. Or paid $50 dollars for that gym membership you never use. In order for your budget to work, you must be accurate about your spending.

If you do this properly and honestly, a budget will show you where your money is coming from, how much you get each month, and where it all goes. And once you know that, you can make the necessary adjustments to reach your goals - either by finding ways to increase your income or decrease your spending, or both.

I am not going to get into the nuts-and-bolts, nitty gritty of how to make a budget. There are plenty of tools and apps available for that. What works for me may not work for you. It can be as simple as writing everything down with pen and paper to creating a spreadsheet on your computer. As long as it includes ALL of your income and ALL of your average expenses. But I do have some tips that will make it easier.

For my entrepreneurs in the crowd, when figuring your monthly income, I recommend always using your lowest-earning month as your base income. Then if you earn more, it's a bonus! 

If you are still working on building your emergency fund, don't forget to include unexpected expenses in your overall budget plan. Until you you have that emergency money stashed, a pricey car repair or medical bill can totally derail your budget. So include that in your plan so you'll be ready.

If your income is more than your expenses, YAY! Put 20% of your money into savings. If your have more money going out than coming in, it's time to take a serious look at making some lifestyle changes if you want to reach your goals. 

Your budget isn't carved in stone. Things change. Priorities change. Jobs change. We move. We have kids. Our kids have kids (and if you think that doesn't impact your budget, talk to me! Being a grand can be expensive!). Make sure you review your budget every few months to ensure it's still working for you. 

Once you have your basic budget ready, fine-tune it to make it fit your needs. As you get more familiar with your income and spending habits, you'll see areas where you can make changes. Spending too much on credit card payments? Stop using them unless you can pay it off each month. Have a tendency to overspend on certain things?  Read my post The First Step to Saving Money - Spend Less Than You Earn for some tips on spending less. And keep learning. Improving your financial skill wand learning how to make your money work for you will greatly increase your ability to meet those financial goals!

Financial Wellness

Financial wellness. You've probably heard that term a lot! It's one of the hottest buzzwords. Network Marketers use it to get you to join their programs. Financial consultants use it while offering you their services. Coaches and gurus use it. Even some health professionals use it. EVERYONE wants you to have financial wellness.

But what exactly is "Financial Wellness"? And how do you know when you've got it?
According the Consumer Financial Protection Bureau, you are financially healthy when you have financial security and financial freedom of choice, both in the present and in the future. 

In other words, financial wellness is your ability to manage your money...to be able to afford necessities (food, clothing, shelter, etc), to be able to save (for emergencies or other future expenditures), to invest and grow your money (so you can increase your net worth), and to protect your wealth (from market fluctuations, loss of employment, etc). 
Your financial wellness includes things like your budget, your savings, your credit, and much more.

If any of things aren't where you want them, now is the time to fix them. So your overall financial wellness is a healthy as possible. 

Here's some tips:

1. Stick to your budget. Ah...you thought I was going to say make a budget, didn't you. But the truth is that while plenty of folks have made budgets of some sort, most don't actually stick to them. So once you've created your budget, figure out a plan, some system of accountability, to help you actually stick to it!

2. Build that emergency fund. What do we talk about all the time at Smart About Stuff? Being prepared for emergencies. And one way you make sure you are financially prepared is to have an emergency fund. So when life's hiccups happen, big or small, you can cover them until you get back on your feet.

3. Save for your future. No one wants to work until they die. So start planning and saving for retirement now. There are many vehicles to get you there. Which brings me to my next tip...

4. Consult a financial advisor: Unless you are already a financial expert, you need someone to help you determine what type of financial plan is right for you. It’s best to use an advisor that charges a flat fee for a financial plan, not one that earns commissions by selling the products that you need.

5. If you're credit is good, keep it that way. If it's not, fix it!: You're credit score can do more than get you better interest rates. Many employers now run a credit check before making a job offer. Apartment managers run credit checks when you try to rent a place to live. Insurance companies my run them. In fact, you would be surprised at how many times your credit score has an impact on something other than getting a loan or a credit card. So if it's good, keep it that way. Don't go into unnecessary debt. And if you do borrow money, play it back promptly! 

If you're credit isn't so good, fix it. Usually this means you either have too much debt compared to income, or you are delinquent on paying your bills. Or both. Whichever it is, the best way to fix it is to pay what you owe. There are no magic ways to fix your credit. So get your credit report and review it for errors. If it's accurate and your credit still sucks, contact your creditors and work out payment plans with them. Trust me...most of them will be willing to work with you. 

6. Create multiple income streams: If 2020 proved anything, it was the need for multiple streams of income. So many people lost their jobs. Some did go on to find alternate ways to earn a living. But many were totally reliant on unemployment and the government. What a mess that was! Yes, your emergency fund is there to help cover expenses if you lose your job. But wouldn't it be better and a lot less stressful if you had other sources of income so you always had cash flow coming in?

Anyone can become for "financially fit." It just means learning some basic money management skills. And then putting what you learn into practice. So what are you waiting for? Let's get started. When the next crisis comes along, and it will, you will be much better prepared. I promise, the peace of mind you'll have is worth it!